Thanksgiving in Danger, Mnuchin Angers Fed, Pound Rises - What's up in Markets

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Thanksgiving in Danger, Mnuchin Angers Fed, Pound Rises - What's up in Markets
Credit: © Reuters.

By Geoffrey Smith -- California issued a 10 PM curfew and the CDC urged Americans not to travel home for Thanksgiving. The administration and Fed get in a fight over emergency loan programs. Xi Jinping again offers Asia an alternative to U.S. leadership and the pound is rising on hopes that a post-Brexit deal is near. Meanwhile, Pfizer files for FDA approval of its Covid drug and the WHO says Gilead's remdesivir isn't effective against it. Here's what you need to know in financial markets on Friday, November 20th.

1. CDC cancels Thanksgiving as California issues curfew

The Center for Disease Control urged Americans not to travel home for the Thanksgiving holiday, in an attempt to head off what promises to a nationwide superspreader event akin to the Memorial Day and Labor Day weekends earlier in the year.

The State of California late on Thursday issued a stay-at-home order for the hours between 10 PM and 5 AM local time, as it struggles to cope with the latest wave of Covid-19. Hospitalizations, which topped 80,000 for the first time nationwide on Thursday, have risen by some 70% over the last month in California.

2. Mnuchin riles the Fed as political theater continues

Treasury Secretary Steven Mnuchin refused to extend the authority for a handful of the Federal Reserve’s emergency lending programs set up by the central bank at the start of the crisis.  Mnuchin said the banking system has all the resources it needs to provide credit to the economy without such programs.

The Fed disagreed, saying in a rare public contradiction of the administration that it would be better to ensure the availability of all programs until the economic crisis has passed.  The tone was improved a little by Senate Leader Mitch McConnell saying he remained open to renewing talks on a fiscal stimulus package.

The public dispute is the latest sign of an increasingly chaotic transition period, which was inflamed again on Thursday by another press conference by the Trump campaign’s lawyers which did little except repeat wild allegations of fraud that have already been rejected by over two dozen courts.  President Trump will meet later Friday with two representatives of Michigan’s legislature in an effort to stop the state certifying its election result. President-elect Joe Biden leads the vote count there by 156,000.

3 Stocks set to open mixed; drug companies eyed

U.S. stock markets are set to open mixed, with the vaccine-fueled optimism of Monday fading further under pressure from the short-term developments in the pandemic.

By 6:35 AM ET (1030 GMT), Dow Jones Futures were down 56 points, or 0.2%, while the S&P 500 Futures was down 0.1% and NASDAQ Futures were up 0.2%.

Despite Moderna’s announcement of its vaccine’s efficacy against Covid-19 on Monday, and Pfizer’s announcement of its drug’s safety on Thursday, the Dow and S&P 500 are on course to end the week lower, with only the Nasdaq in positive territory.

Stocks likely to be in focus include Gilead Sciences (NASDAQ: GILD ), whose remdesivir antiviral drug was dismissed by the World Health Organization as ineffective in treating Covid-19, and Tesla (NASDAQ: TSLA ), which hit an all-time high on Thursday on a couple of bullish broker reports. In addition, Pfizer Inc (NYSE: PFE ) and BioNTech (NASDAQ: BNTX ) said they will file for FDA approval of their Covid-19 drug.

4. Xi promises, PBoC holds fire

Chinese President Xi Jinping said in a keynote speech that China will remain committed to globalization and free trade.

“We will definitely not go down a path of historical reversal, will not seek to ‘decouple’ or create closed and exclusive ‘small circles,’“ Xi told a meeting of political and business leaders.

He said the country will sign more free trade agreements like the Regional Comprehensive Economic Partnership, a deal that doesn’t include the U.S. but does include almost all of southeast Asia, Australia and New Zealand, which was wrapped up last weekend.

Elsewhere overnight, the People’s Bank of China chose not to join a growing list of global central banks easing monetary policy, keeping its key rate unchanged at 3.85%.

5. Sterling lifted by data, Brexit talks

The British pound was on course for its highest weekly close against the dollar since August, on a mixture of surprisingly strong economic data and optimism that a disorderly end to the post-Brexit transition agreement can be avoided.

By 6:35 AM ET, the pound was at $1.3286, up 0.2% on the day and 0.8% on the week. It was also edging toward 1.12 euros .

Earlier, U.K. retail sales for October came in well above expectations (despite a further downturn in consumer confidence), while government borrowing in the month turned out to be considerably lower than projected.

Meanwhile, EU officials were quoted anonymously by newswires as saying the two sides are gradually narrowing their differences over key issues such as state aid rules and fishing quotas.


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